Fitch Upgrades 6 Classes of LB-UBS 2003-C5; Assigns Outlooks

CHICAGO--(BUSINESS WIRE)--Fitch Ratings has upgraded and assigned Rating Outlooks to LB-UBS commercial mortgage pass-through certificates, series 2003-C5, as follows:

--$22.8 million class F to 'AAA' from 'AA'; Outlook Stable;

--$17.6 million class G to 'AA' from 'A+'; Outlook Stable;

--$15.8 million class H to 'AA-' from 'A'; Outlook Stable;

--$10.5 million class J to 'A' from 'A-'; Outlook Stable;

--$14 million class K to 'A-' from 'BBB+'; Outlook Stable;

--$12.3 million class L to 'BBB-' from 'BB+'; Outlook Stable;

In addition, Fitch has affirmed and assigned Rating Outlooks for the following classes:

--$6.9 million class A-2 at 'AAA'; Outlook Stable;

--$220 million class A-3 at 'AAA'; Outlook Stable;

--$328.1 million class A-4 at 'AAA'; Outlook Stable;

--Interest-only (I/O) class X-CL at 'AAA; Outlook Stable;

--Interest-only (I/O) class X-CP at 'AAA; Outlook Stable;

--$22.8 million class B at 'AAA'; Outlook Stable;

--$24.6 million class C at 'AAA'; Outlook Stable;

--$15.8 million class D at 'AAA'; Outlook Stable;

--$15.8 million class E at 'AAA'; Outlook Stable;

--$5.3 million class M at 'BB'; Outlook Stable;

--$3.5 million class N at 'BB-'; Outlook Stable.

Class A-1 has paid in full. Fitch does not rate classes P, Q, S or T.

The rating upgrades reflect the increased subordination due to scheduled amortization and paydown of 23.1% since Fitch's last rating action. Rating Outlooks reflect the likely direction of any rating changes over the next one to two years.

As of the October 2008 distribution date, the pool's aggregate principal balance has decreased 45.7% to $763.4 million from $1.41 billion at issuance. Approximately 28% of the pool has fully defeased, including one shadow-rated loan (10.1%).

There is one specially serviced loan (0.3%), with expected losses. The loan is secured by a multifamily property located in Augusta, Georgia and was transferred to special servicing in February 2007 due to delinquency. All expected losses are anticipated to be fully absorbed by the non-rated class T.

At issuance, there were eight shadow rated loans. Five have paid in full and one is fully defeased, 70 Hudson Street (10.1%). The two remaining non-defeased shadow-rated loans comprise 23.9% of the pool. Fitch reviewed recent operating statement analysis reports, rent rolls, and other performance information provided by the master servicer.

The largest shadow rated loan, the Westfield Shoppingtown Portfolio (18.8%), is secured by two cross-collateralized cross-defaulted regional malls. Westfield Shoppingtown Plaza Bonita consists of 429,474 square feet (sf) of an 820,353 sf enclosed regional mall located in National City, California. Westfield Shoppingtown Vancouver consists of 413,372 sf of an 883,219 sf regional mall located in Vancouver, Washington.

As of year-end (YE) 2007, the Fitch-stressed debt-service coverage (DSCR) for the portfolio has increased to 1.63 times (x) compared to 1.40x at issuance. The mall's combined overall occupancy as of September 2008 was 80% compared to 86.3% at issuance. The Fitch-stressed debt service coverage ratio is calculated based on a Fitch adjusted net cash flow and a stressed debt service based on the current loan balances and a hypothetical mortgage constant. The loan anticipated repayment date is June 11, 2013.

The other remaining shadow rated loan, The Mall at Steamtown (5%), is secured by a 568,657 sf regional mall located in Scranton, PA. The mall is anchored by Bon-Ton and Boscov's, which filed for bankruptcy in August 2008. Currently, the Boscov's space at the subject mall is not on the closure list. As of July 2008, occupancy at the mall was 91% as compared to 95% at issuance. Fitch's stressed DSCR based on YE 2007 operating results is 1.26x.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.